Beware of Loan Sharks: Distinguishing Licensed Moneylenders from Unlicensed Ones

Beware of Loan Sharks: Distinguishing Licensed Moneylenders from Unlicensed Ones 04/11/2019

Beware of Loan Sharks: Distinguishing Licensed Moneylenders from Unlicensed Ones

At some point, you may need a source of emergency funds for financial issues. Your first option would be to take out a bank loan, but that comes with the anxiety of not knowing whether the bank will approve your request. An easier option is to go straight to moneylenders since they offer a faster and simpler way of providing the amount you need.

Although moneylenders are lifesavers for people who need quick cash, some of them falsely claim to be certified lenders and prey on unsuspecting borrowers. Their business practices are often unsavoury, and they typically charge high interest rates. They threaten buyers to pay as soon as possible, adding unnecessary stress and anxiety.

The last thing you want when you’re worried about your finances is to fall into the trap of a loan shark. These tips help determine whether you’re dealing with a licensed or unlicensed moneylender.

Check the terms of the loan

Singapore law requires legal moneylenders to be transparent about the loan terms. The conditions of the loan must include the interest loan, payment methods and repayment period. Read through the terms and ask the lender any questions about the contract. If the moneylender doesn’t explain the terms in a manner that you understand, or if they don’t address your concerns altogether, look someplace else.

The loan amount depends on your income

Licensed money lenders follow Singapore law that sets the loan amount depending on a borrower’s annual income. As of 2016, the rates are as follows:

  • If less than $20,000, up to $3,000
  • If at least $20,000, six times the monthly income
  • If less than $10,000 for foreigners residing in Singapore, up to $500
  • If at least $10,000 and less than $20,000 for foreigners residing in Singapore, up to $3,000

Should a moneylender offer you a higher amount that the usual loan that is allowable for your income bracket, they might be a loan shark.

Always ask for a contract

Licensed moneylenders are aware that the agreement between a borrower and a lender is legal and binding once they sign a contract. Be wary of loaners who offer you money without a contract. Stay clear of moneylenders who ask you to sign a blank or incomplete contract.

Check if the interest rates are reasonable

The law dictates the interest rates that borrowers are to pay for their loans. Starting October 1st 2015, moneylenders are required to charge a 4 per cent monthly interest rate that borrowers will settle on top of the principal amount.

Check the list of licensed moneylenders

When in doubt, go to the official website of the Ministry of Law in Singapore for a complete list of recognised and registered moneylenders. In some cases, the company might be new and the list may have yet to be updated, so call the Ministry to double-check.

Look for a physical office

Singaporean law requires that licensed moneylenders must operate in an actual office. The address of the moneylender must match the information on the website. The physical office must also be professional-looking and well-maintained. On the other hand, loan sharks would rather transact with you online.

Capital Funds Investments: The Premiere Licensed Moneylender in Singapore

Even if you’re in a tough financial situation, it doesn’t mean you should seek help from the first moneylender you find. With several loan sharks around, do your research to save yourself the stress and anxiety of dealing with unlicensed moneylenders.

Authorised by Singapore’s Ministry of Law, Capital Funds Investments provides fast and unsecured money loans to those who need it. Whether you need money to grow your business or tide you over during an emergency, we are here to help.

For enquiries, call us on (65) 6281 7736 or email

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